Without profit, a company can’t innovate. The governing structures of financial companies are in a mess, and politically connected executives are parachuting down for a soft landing when their government service ends. Young talent is packing up and leaving, while those who are less productive continue to enjoy hefty paychecks.

When asked about the crisis facing the financial industry, five experts agreed the problems won’t be solved overnight and offered an array of recommendations to move forward. Their advice was condensed into eight tips.

1. End parachute appointments

Over the past six years, according to one lawmaker, there have been 31 appointments of retired public servants at KB Financial Group and affiliates, and 28 at Woori Financial Group affiliates.

These former officials not only took positions as auditors, but as presidents. One even became a holding company chairman. The five experts say parachuted executives are a deterrent to management innovation and a drag on the vitality of organizations.

“In the past, the most important attribute of top executives in the financial industry was using regulations to the greatest advantage for their companies, and today it is the ability to adapt to a rapidly changing business environment and planning for the future,” said Choi Bum-su, Korea Credit Bureau CEO. “This is why in advanced economies, they are surprised when a professor or a bureaucrat suddenly becomes a CEO.”

2. Support success and failure

This is shaping up as a devastating year for the brokerage industry. In March, Apple Investment and Securities decided to fold, and BNG Securities recently followed suit. Since the late 1990s global crisis, the number of brokerage firms has been growing. In 1997, there were 36 firms and last year there were 62. Until recently, closures were unheard of.

The market is welcoming such changes in the saturated brokerage industry as cutthroat competition drives down brokers’ commission fees on stock trades at a time when the number of transactions has been falling since 2008.

“The market can regain its vitality only when companies that do well survive and those that don’t are eliminated through competition,” says Park Yong-rin, head of the financial industry division of the Korea Capital Market Institute. “The beginning of this process is welcome, and the government should encourage the market to rearrange itself through long-term M&As.”

3. Remake holding companies

The U.S. financial institution Citigroup was launched in 1998 with a holding company structure. On the outside it looks similar to Korean holding companies, but the way it is managed is completely different. The bank, insurance and brokerage divisions under Citigroup work like a single unit. The holding company focuses on financial, personnel and risk management. The top management of affiliates focus on their specialized field, such as retail finance, corporate finance and asset management. Information and employees move around freely among the affiliates.

In Korean financial holding companies, banking units have too much influence. There’s no exchange of information or personnel among the affiliates. That’s why experts say the holding company structure is unnecessary.

“Our financial affiliates are vertical top-down organizations, which reduces efficiency, whereas in the horizontal matrix-like system, there is movement of information and the work force,” says Choi of KCB. “If the latter system were used, it could be a platform for one-stop financial service to consumers.”

4. Differentiate paychecks

Employees who help issue credit cards and sell financial products and loan consultants at bank branches are mostly regular workers. Although the work they do is comparable, some are paid 100 million won ($98,000) a year because of the length of their employment.

Bank employees are paid based on years of service rather than job performance, a system that has been considered a major obstacle to innovation and cost reduction. In brokerage firms, employees’ paychecks are cut when they fail to produce profits. Because the base pay at banks is high, it is difficult to adjust in times of crisis.

Even employees working in areas that require specialized expertise receive the same pay as those who perform simpler tasks. As a result, exceptional talent frequently moves abroad for higher pay.

“When a bank is in a high-growth stage, high paychecks are not a problem, but in times of a crisis such as low growth, managing labor costs can be a difficult problem,” says Kim Woo-jin, a researcher at the Korea Institute of Finance. “Companies need to choose between lower wages with guaranteed job security or higher paychecks with more risk.”

5. Get real with fees

“The financial industry needs to expand its profit base and there is a need to be more realistic about fees,” Governor Choi Soo-hyun of the Financial Supervisory Service said in a meeting with reporters a year ago. “Banks’ net profits are so small that their soundness is becoming a problem.” This led to various reports that the financial industry’s fees would be raised, which spurred public opposition by civic groups. Choi quickly backtracked, saying he never made the remark.

But the experts say the political dispute surrounding financial industry revenue sources, including fees, has become an obstacle to improving profitability. When the net interest margin (NIM) goes up, politicians claim financial companies are gouging the public through high interest rates. When fees on automatic money transfers rise, criticism comes fast and furious.

“Politicians use issues like credit card fees and deposit withdrawal charges to win votes,” says Kim Dong-won, a professor at Korea University. “Financial companies won’t be able to generate profit when they can’t get appropriate pay for their services. The result is less money for loans and a negative effect on the economy.”

6. Change regulatory execution

“Authorities create regulations that interfere with setting prices, and when the industry complains, they amend regulations to add loopholes, create more rules or allow companies to branch out into other businesses,” says Jeon Yong-sik of Korea Insurance Research Institute.

For example, the financial authority has pressured auto insurers to hold the line on premiums, saying lower-income households would be devastated by an increase. But when insurers complained, the financial authority decided to allow non-life insurers to sell long-term insurance policies.

“These decisions should be determined by the market,” says Jeon. “Although the financial regulator allows insurers to decide how much premiums should be, if it finds fault in the process of setting prices, it can slap on a fine that is so strong it could bankrupt a company. The financial industry cannot move forward with such immature regulation execution, indirectly setting prices and then giving leeway when the industry starts complaining. It is stuck in a difficult situation.”

7. Find the superstars

Sandy Weill, who once headed Citigroup, comes from a family that emigrated from Poland. Weill is a self-made man who started off as a runner for Bear Stearns on Wall Street.

Goldman Sachs CEO Lloyd Blankfein, who was raised in the housing projects of New York, was the highest-paid banker in the United States and Europe last year. He started at a small firm, investing in commodities. Experts say that when there are such role models in Korea, talent will flood the financial industry.

Young people in their 20s and 30s at brokerage firms leave the industry largely because they lack the inspiration.

“Why would young talent devote their lives to the Korean financial industry when most they can hope for is an executive position for a year or two, if they are lucky, while major positions are handed to parachute personnel?” said Choi of KCB. “The culture has to be changed so talented young people can build up their experience.”

8. Boost R&D spending

“Samsung Electronics spends roughly 13 percent of its annual revenue on research and development, but the financial industry barely puts any money into R&D,” says Kim of Korea University. Recent financial breaches and the lack of new product development have largely been caused by a lack of R&D investment, he says.

“Financial companies’ sales strategies are so backward they are not blocking customers who are coming in but also not trying to hold onto those who are leaving,” says Kim, the Korea Institute of Finance researcher, adding that financial companies should have a customer relationship management system and analyze their customers using big data. Yet such systems, he says, barely exist at all.